The Electric Slide
By Daniel Gross
Photo illustration by Slate. Photos by Nerthuz/iStock/Thinkstock and crossstudio/Thinkstock.
Super-fuel-efficient cars
have become political footballs. Supporters argue that investing in
battery technology and the development of hybrid and electric cars will
help reduce our dependence on fossil fuels. Meanwhile their critics rail
against Department of Energy loans to battery and car companies while
state legislatures have passed laws that ban Elon Musk’s Tesla from
bypassing influential local dealers and selling its vehicles directly to
consumers.
This backlash reached a new level on April 2 when Georgia’s Legislature passed a big transportation law that would, among other provisions, end the state’s generous $5,000 tax credit for electric vehicles and slap a new $200 registration fee
on people who already own them. Gov. Nathan Deal hasn’t signed the law
yet but is expected to do so. Where his state once provided financial
incentives to people who drive ultra-fuel-efficient cars, it will soon
penalize them.
Georgia isn’t the first state to pass a law targeting the
wallets of electric and hybrid vehicle owners. Liberal Washington state
led the way—in 2013, it pushed through a $100 annual tax on electric
cars. Virginia followed with a $64 charge on hybrids.
To a degree, these taxes on efficiency are the byproduct of
the larger political and cultural war over state and federal support of
battery innovation. But they’re also a sign of how the ongoing
automobile revolution isn’t just transforming the way some of us drive
but an entire system of taxing drivers to maintain the roads they drive
on.
Currently, federal taxes on motor fuels—18.4 cents per gallon of gasoline, 24.4 cents per gallon of diesel, and so on—go
into the federal Highway Trust Fund, which gets distributed to the
states for upkeep and construction. States collect billions of dollars
each year in their own gasoline taxes.
Until recently, the gas tax was something like a universal
use tax that helped fund highway construction. Drive a car or truck,
and, by buying gas, you pay the tax for the wear and tear you create.
Sure, you could reduce your taxes by buying a more fuel-efficient
car—one that got, say, 30 miles per gallon instead of 15 or 20. But it
was difficult for drivers to evade the tax entirely, or even in large
measure. Cars and trucks generally fell in a narrow spectrum of fuel
consumption, and gasoline use generally rose in tandem with economic
growth, as this great Google chart shows.
Now things have changed. Thanks to a weak economy and
demographic shifts, the number of miles driven in the U.S. has generally
declined or been stagnant since 2007. More significantly, there has
been a quantum leap in efficiency for basic cars. Hybrids, plug-in
hybrids, and electric cars may collectively account for about 3 percent of car sales in any given month.
But they are helping to create a new dynamic. With conventional cars,
automakers have successfully experimented with engine design and lighter materials like aluminum. According to the University of Michigan Transportation Research Institute, the typical car sold in March 2015 gets 25.4 miles per gallon; that’s up 26 percent from October 2007.
The net result: The volume of gasoline sales is falling. According to the Energy Information Administration, the amount of gasoline used
in the U.S. in 2014 stood about 4 percent below the 2007 peak—of 3.39
billion barrels—and below the level of 2003. As a result, federal gas
tax collections are slumping. In 2013, some $19.4 billion in gasoline taxes were allocated for highway spending, down from $21.2 billion in 2012.
The innovation has also created a new dilemma. We now have a
class of people (mostly well-off) who can choose to get around without
having to pay the gas tax. In effect, the Malibu- and F-150-driving
masses are paying gas taxes that subsidize highway and road repair while
the elite driving their $75,000 Teslas don’t pay a penny—even though
the Tesla creates as much wear and tear and occupies the same amount of
space as a Honda Accord.
So it makes some sense to introduce mechanisms that ensure
all car owners pay for road upkeep. But some of the efforts so far are
absurd. The fees are arbitrary—you get taxed just for owning the car,
not whether you drive it or not. Virginia’s $64 charge on hybrids was
particularly silly. After all, there are regular combustion engines that
get much better mileage than hybrid SUVs. (Virginia’s hybrid tax was repealed soon after the election of current Gov. Terry McAuliffe, who was famously involved with a failed electric car company.) Taxing all-electric cars while ignoring plug-in hybrids is likewise foolish. The website Volt Stats
has great data about how frequently individuals and groups of owners of
the Volt, a plug-in hybrid, drive in all-electric mode. The top
individual in this group in Huntington Beach, California, has driven his Volt 18,722 miles, of which 18,255—97.2 percent—were in electric mode.
The issue is bound to get worse. Almost every day, hybridcars.com
documents continuing advances in efficiency—new hybrids, plug-in
electrics, engineering fixes that improve efficiency. Every month,
another 10,000 cars that run partially or exclusively on electricity hit
the road. The Elio,
a three-wheel car that can get 84 miles per gallon, has already taken
tens of thousands of reservations. Should buyers of that car be charged
an extra hyper-efficiency tax?
Innovation has laid bare the fact that making drivers
compensate the public for their use of the roads through taxes on
gasoline purchases may not work in the 21st century. In fact, it makes much more logical—and economic—sense to tax people based on the number of miles they drive.
That’s what Oregon is aiming to do. In 2013, the legislators authorized
the state’s Department of Transportation to set up a volunteer program
starting this summer, in which 5,000 cars would be equipped with
electronic equipment that measures the distance they travel. Car owners
would be charged 1.5 cents for every mile they drive (and will receive
an equivalent credit against gas taxes). As the state noted, “this will
not be another pilot program but rather the start of an alternate method
of generating fuel tax from specific vehicles to pay for Oregon
highways.”
Sounds like progress. The gas tax was never intended to be a
tax on behavior; it was intended to be a use tax. And a use tax only
works if pretty much everybody has to use the product in roughly equal
proportion to his or her activity. That’s why we should figure out a
more fair way to pay for road upkeep—one that doesn’t discourage
fuel-efficient driving in the process.
To purchase your copy of Car Dealer Hell, CLICK HERE
For more information about the Summit Murder Mystery series, CLICK HERE
Follow me on TWTTER
Friend me on FACEBOOK
Follow my boards on PINTEREST
To purchase your copy of Car Dealer Hell, CLICK HERE
For more information about the Summit Murder Mystery series, CLICK HERE
Follow me on TWTTER
Friend me on FACEBOOK
Follow my boards on PINTEREST
Comments
Post a Comment